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Government Reduces Customs Duty on EV Components

The government has announced that it has reduced the applicable customs duty on parts and components of electric vehicles. The move is aimed at considerably influencing the rate of EV adoption in the country.

The government has lowered the customs duty on import of EV components to 10-15 percent. So far, EV components imported for assembly in India attracted import duty of 15-30 percent. However, with this shift, the assembled parts and components will now attract a duty of 15 percent and above up to 60 percent.

The Central Board of Indirect Taxes and Customs (CBIC) have created a separate category for EV components.

As per CBIC, “Electrically operated vehicles, if imported as a knocked down kit containing all the necessary components (parts or subassemblies) for assembling a complete vehicle with disassembled battery pack, motor, motor controller, charger, power control unit, energy monitor contractor, brake system, electric compressor not mounted on chassis will attract a duty of 10 percent.” On the other hand, “Electrically operated vehicles, if imported as a knocked down kit containing all the necessary components, parts or subassemblies, for assembling a complete vehicle with pre-assembled battery pack, motor, motor controller, charger, power control unit, energy monitor contractor, brake system, electric compressor not mounted on a chassis or a body assembly, will attract a duty of 15 percent.”

Other combinations will attract a duty of 25 percent, according to the announcement. Battery pack for use in the manufacture of EVs or hybrid vehicles will attract a duty of 5 percent.

According to the CBIC, EVs and its components with cost, insurance, and freight value more than $40,000 will attract 100 percent duty, while those with value less than $40,000 will attract 60 percent duty.

This is one of the several positive developments that have lately occurred in India’s EV sector. To boost the growth of EVs in India, the government formerly slashed applicable rate of the Goods and Services Tax (GST) on lithium ion batteries. The government is also planning to subsidize EV charging infrastructure.

Many states have geared up for the uptake of EVs as a means of mainstream mobility and others have commenced plans to develop EV manufacturing hubs.